Initial Payments Announced

[charliep]

CWB initial payments have been released. More to follow.

[charliep]

You can read the numbers but I find the percentages interesting.

By way of introduction, the recommendations were based on the May PRO. Know this through other processes I get involved in.

1CWRS 12.5 intitial $147.50/tonne port. That is 72 % of the May PRO and about 63 % of the July PRO. Using Alberta deduction of $50/tonne (value used in 2006/07 PRO), this results in an elevator based initial of $98/tonne versus an expected total payment of $182/tonne (you get a 54 % down payment).

1CWAD 12.5 intitial $144/tonne port. That is 66 % of the May PRO and about 53 % of the July PRO. Using Alberta deduction of $50/tonne (value used in 2006/07 PRO), this results in an elevator based initial of $94/tonne versus an expected total payment of $222/tonne (you get a 42 % down payment).

Feed barley initial payment of $107/tonne port. That is 59 % of the March PRO. No PRO released since then.
Average Alberta deductions are $55/tonne (value used in 2006/07 PRO). That is an Alberta initial payment of $52 (deductions are more than you paid) versus recent non board prices of $170/tonne at elevators sourcing feed barley for export business. You are getting less than a third of your money at delivery.

Special select 2 row. Initial payment $144/tonne port. That is 60 % of the March PRO. No PRO released since then.
Average Alberta deductions are $55/tonne (value used in 2006/07 PRO). That is an Alberta initial payment of $89 versus recent non board prices of $215/tonne from maltsters. You are getting less 40 % of your money at delivery.

I notice the whining and snivelling is already starting from the CWB. If I was the federal government, I would leave initial payments where they are today until the normal first adjustment period (sometime Oct. to Dec.) and force all farmers to use the wonderfull CWB producer pricing options they like to brag about. Then all farmers (rich and poor) can find out what the programs are really all about.

[charliep]

I am going to pose a question see if I can get someone mad.

When the cost of managing risk through an early payment option is so cheap, why should the federal guarantee initial payments beyond current low levels? The cost of an 80 % early payment option today ranges from $2.25/tonne for hard red spring wheat to $3.25/tonne for durum.

I am assume most farmers believe this is low cost because no one complains when the CWB tacks on additional $5/tonne for the DPC starting yesterday. No one complains about the $2.50/tonne adjustment factor change on the FPC contracts starting August 1. Why wouldn't everyone use this program and let the CWB manage your risk versus asking the tax payer to take this responsibility on? Why does the federal government (i.e. payer) have any say in initial payments (or for that matter responsibility for deficits?

The Early payment options are all posted on the web now. Premiums for 80 % EPO coverage ranges from $2.25 to $3.25/tonne. Premiums for 90 % coverage range from $7.25 to $10.25/tonne (durum top end) and 100 % coverage $15.75/tonne to $23.50/tonne (durum again top end).

[charliep]

Forecast the initial in another thread so thought I should confess my mistakes.

Here is the forecast [ACTUAL IN BRACKETS].

I am going to guess the 2007/08 initial payment for 1CWRS 13.5 at about $160/tonne port ($3/bu here in Alberta) [REALITY WAS THIS NUMBER WAS $153.70/TONNE]. CPS at $140/tonne ($2.50/bu). [REALITY WAS THIS NUMBER WAS $126.50 OR TO ADD PAIN $2.10/BU IN ALBERTA] 1CWAD 13 protein - same as 1CWRS 13.5 ($160/tonne port or $3/bu Alberta). [REALITY WAS $147.20/TONNE OR $2.65/BU IN ALBERTA].